By Dave Lindorff

In a New York Times column on Monday (“Behind the Bush
Bust”), economics columnist Paul Krugman mused on whether President
George Bush could be blamed for the nation’s economic crisis. His
conclusion was that, yes, to some extent the crisis was Bush’s fault,
but he largely lets the current administration off the hook, instead
blaming Republican policies dating back 10-15 years.

Oddly, Krugman does say that a key cause of economic problems has
been rising energy prices, but he then attributes these to “growing
demand from China and other emerging economies,” and suggests that
prices might have been at least a bit lower had the US, after 9/11,
adopted “higher gas taxes and fuel efficiency standards,” a failing he
attributes to Bush.

The gaping hole in Krugman’s logic is the Iraq War, which the
columnist, incredibly, doesn’t even mention. Yet clearly, the invasion
and subsequent war and occupation of Iraq which was purely the result
of Bush/Cheney machinations, has been a major, if not the major cause
of oil price increases.

By destroying Iraq’s oil production, and by hindering much of
Iran’s production (Iran, seen as an enemy by the US, has been frozen
out of capital markets, blocking it from being able to modernize and
even maintain its own huge oil infrastructure), and putting even
Kuwait’s and Saudi Arabia’s production at risk, the US war in Iraq has
jeopardized about one-third of the world’s oil capacity—a fact not lost
on oil speculators. Every rumor of a longer occupation or a wider war
in the Middle East—especially a possible attack by the US on Iran--has
pushed up oil prices further, as has every attack on a pipeline.

It is no secret why crude oil, over the course of five years, has
soared four or five times in price. Demand has certainly not gone up by
that amount. It hasn’t even doubled. What has happened is that the
Middle East has been thoroughly destabilized by American military
action.

The rise in oil prices has been the major cause of the US dollar’s
stunning collapse, which in turn has limited the hand of the Federal
Reserve, which cannot risk lowering interest rates as much as it would
like to stimulate economic growth, for fear of further undermining the
dollar. This in turn has allowed the mortgage crisis to fester and grow
worse.

At the same time, the massive amount of industrial production that
has gone into the war effort—the building of planes, tanks, armored
cars, etc.—while perhaps producing some jobs, has been wholly
inflationary in its effect, since this is production that cannot add to
available goods and services in the civilian economy. That means that
there are more people with wages and salaries, chasing the same number
of things to buy—a sure-fire recipe for higher prices. Add to that the
huge war budget, all funded by debt, and you have even more downward
pressure on the dollar.

Bush’s and Cheney’s war in Iraq has been, it should be clear, a
huge catastrophe for the US economy, and yet somehow Prof. Krugman
managed to miss it completely. You could read his column and not even
know that the country is and has been, for the past seven years, at war.

I’m not sure what to make of this oversight on Krugman’s part. Is
he trying to downplay the war, figuring it’s soon to become a
Democratic venture? Is he unfamiliar with the argument that war is bad
for economies?

One thing is clear: You cannot look at a nation at war and analyze
its economy without considering the impact of the war, which is what
the usually astute Krugman has done here.

But let’s make the point crystal clear, even if Krugman doesn’t see
it or doesn’t want to see it: The slumping US economy, and the crashing
US dollar, which is heading towards Peso status as a trash currency,
are clearly the direct result of Bush/Cheney policies, aided and
abetted by both Democrats and Republicans in Congress, who have bought
the story line that war is good.

We will all be paying for this imperialist misadventure for years to come.
_______________
DAVE LINDORFF is a Philadelphia-based journalist and columnist. His
latest book is “The Case for Impeachment” (St. Martin’s Press, 2006 and
now in paperback). His work is available at www.thiscantbehappening.net